equity Archives - Fintelligents

Equity vs Fixed Income

Equity vs Fixed Income

If a person wants to generate income or appreciation in the future he acquires an asset known as investment. An investment is always purchased to generate more in the future than you invest today. But there is always a risk associated with the investment. Investments instead of profits can also generate losses as they can lose value in the future. For example, you invest in a company and that company goes bankrupt. One can invest in these different types of investments such as bonds, stocks, mutual funds, exchange-traded funds, index funds, and options. This article aims to provide an overview of Equity vs Fixed Income. (more…)

Commodity-Linked Securities

Commodity-Linked Securities

Investment instruments or securities that are linked to one or more commodity prices are known as commodity-linked securities. These commodity-linked securities provide income to the owner, generally in the form of pay-outs. Like, stocks and bonds, commodities are a class of assets but they are physical products that have uniform quality and are produced in large quantities, for example, cotton, gold, oil, gas, etc. (more…)

Equity market

Equity market

An equity market is a market during which shares of companies are issued and traded, either through exchanges or over-the-counter markets. Also referred to as the stock exchange, it's one among the foremost vital areas of a free enterprise, it gives companies access to capital to grow their business, and investors a bit of ownership during a company with the potential to understand gains in their investment supported the company's future performance. (more…)

Equity Derivatives

EQUITY DERIVATIVE

An equity derivative is a type of financial instrument. The value of an equity derivative is derived from the price movement of an underlying asset. Investors use equity derivatives to speculate or hedge against the downside of their investment. The hedge to mitigate the risk associated with taking a long position or short position. Equity option and equity index futures are two forms of equity derivatives. A stock option is a good example of an equity derivative because the value of the stock option is based on the price movements of the underlying stock. (more…)

Alternative Investments

Alternative Investments

Investing is owning an asset or item with the intention of generating some income or appreciation in the value of the asset. An investment is any means to generate an income in the future including bonds, stocks, real estate, etc. Alternative investments are unconventional investments or investments other than stocks, bonds, and cash. Generally, these types of investments are done by large institutions, high net worth individuals, etc due to their complexity, riskiness, and lack of regulation.

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Falling Knife

Falling Knife

Sharp drops in stocks seen during a week’s time are referred to as a ‘Falling knife”. It is a term used to describe a quick drop in the price of a security, such as a stock. It does not have a specific magnitude or duration to drop before a falling knife constitutes. (more…)

What is Enterprise Value?

What is Enterprise Value?

Enterprise Value (EV) is the measure of a company’s total value which includes both equity and debt capital and uses current market valuation for calculation. Another way for calculating the company value is by Book Value and market capitalization but in Book Value the Valuation Of the Company is calculated on the basis of the balance sheet of the company’s financial statements which may differ from the market value, while in Market Capitalization the valuation of the company is calculated by multiplying the number of equity share that is outstanding by the price of the stock. Thus, current market value and debt are not included in both of these methods respectively. Therefore, Enterprise Value is the method to consider the correct and accurate value of the company. (more…)

Capital structure

Capital structure

What is Capital Structure? Capital structure is basically a combination of debt and equity which is used by the company to finance its operations and overall growth. Debt is loans or bond issues. Short as well as long debts are considered a part of capital structure. Equity is preferred stock, retained earnings, or common stocks. A firm’s capital structure is expressed as a Debt-to-Equity or even Debt-to-Capital ratio. (more…)

Asset Allocation Fund

Asset Allocation Fund

An investment strategy that balances the risk and rewards of an individual’s portfolio by apportioning it to other asset classes by taking into consideration individual goals, risk appetite, and investment horizon is referred to as asset allocation. The fund that provides investors with a diversified portfolio of investments across various asset classes is called an asset allocation fund. The three main asset classes are equity, fixed income, and cash equivalents. (more…)

Equity Linked Notes

What are Equity Linked Notes?

Equity-linked notes (ELNs) are a type of debt instrument which are similar to fixed income security but the risk involved in this instrument depends on the market movement of particular stock or security an individual invests. The equity-linked note is basically a short-term instrument trade for 1 to 4 months in which investors are allowed to purchase their selected security at a discount price from the market price which results into a high return to an investor. Similarly, there is another term called Reversed Equity Linked Notes (RELNs) under this instrument an investor has an option to sell their selected security at a higher price than the price prevailing in the market. In short Equity, Link Notes are the instrument which helps an investor to get a high return from various type of security but the amount of risk involved in of the security will highly depend on the market movement (more…)